Columbus McKinnon to focus on debt reduction, bolt-on acquisitions in fiscal '08

By Jennifer Lanning Drey

Portland, Ore., July 24 - Columbus McKinnon Corp. plans to use its free cash flow to pay down debt and to make bolt-on acquisitions intended to increase its market presence or product portfolio, Timothy Tevens, Columbus McKinnon's chief executive officer, said Tuesday during the company's first-quarter 2008 earnings conference call.

"Our strategy calls for us to add some logical extensions of our product line and/or a market expansion," Tevens said during the call.

"We're having conversations with a number of parties, but nothing that's meaningful enough at this point to report to you."

Columbus McKinnon had cash and cash equivalents of $61.9 million at July 1, versus $48.7 million at March 31. Net cash provided by operating activities during the first quarter was $9.7 million.

In an effort to move toward its stated goal of achieving a 30% funded debt-to-total capitalization ratio, Columbus McKinnon decreased its debt, net of cash, to $112.8 million in the first quarter. The number compares to $123.4 million at the end of the previous quarter and $163.5 million at the end of the year-ago first quarter.

Also during the first quarter of fiscal 2008, Columbus McKinnon announced it would redeem its $22.1 million remaining 10% senior secured notes due 2010, which is expected to result in a funded debt-to-total capitalization ratio of approximately 38.3% and to reduce interest expense by $2.2 million per year, according to a company news release.

"While our strategy emphasizes profitable sales growth and international expansion, it continues to include focus on debt and interest expense reduction to further improve our profitability and provide capital structure stability," Karen Howard, Columbus McKinnon's chief financial officer, said during the call.

At July 1, Columbus McKinnon's funded debt was $174.7 million and the company had $64.8 million available on its $75 million revolver.

Univeyor troubles

Although Columbus McKinnon had what executives called a strong first quarter, the company was troubled by a weak performance by its European material handling systems business, Univeyor.

Columbus McKinnon is currently restructuring Univeyor but may ultimately decide to sell the unit. The company plans to announce a decision on whether it will sell or retain Univeyor by the end of its fiscal third quarter, which also marks the end of the calendar year, Tevens said.

Company-wide, Tevens said he believes Columbus McKinnon is well positioned for a strong performance in the rest of fiscal 2008.

Columbus McKinnon reported first-quarter net income of $9.5 million, compared with net income of $5.6 million in the first quarter of 2007.

Columbus McKinnon is an Amherst, N.Y.-based designer and manufacturer of material handling products.

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